Suzlon Reports Wider Loss on Costs at German Wind Unit

Suzlon Energy Ltd. (SUEL), this year’s
worst-performing stock in the NEX index of clean-energy shares,
reported a wider quarterly loss after incurring costs from
scaling back wind-turbine manufacturing in Germany.

The net loss expanded to 10.6 billion rupees ($173.5
million) in the quarter through June from 8.48 billion rupees a
year earlier, the Pune, India-based company said today in an e-mailed statement. Sales fell 18 percent to 38.9 billion rupees.

Suzlon is struggling to pay down debt accumulated through
overseas acquisitions, which included Hamburg-based unit REpower
Systems SE. A global supply glut reduced turbine prices by 25
percent from their peak in 2009, prompting Suzlon to close some
facilities in Germany and cut staff. Those one-time costs,
combined with a depreciating rupee, weighed on earnings.

“The road ahead continues to present many challenges,”
Group Chief Financial Officer Kirti Vagadia said in a phone
interview. “Based on this performance, we are confident the
business is trending towards normalization,” he said, as the
Indian wind market recovers from its slump last year.

Suzlon ceded its position as the top wind-turbine supplier
in India for the first time in at least a decade last year as it
sought to contain its liabilities. The company reduced staff by
more than 1,000 people in the quarter, having cut more than
1,500 jobs the previous financial year, the statement shows.

Boosted Orders

The shares dropped 4.3 percent to 6.7 rupees today in
Mumbai, extending their decline this year to 64 percent.

Suzlon is on schedule to divest about $400 million in
assets including component manufacturing, old factory units and
office complexes, Vagadia said.

Its order book totaled 5.36 gigawatts at the end of the
quarter, having added 356 megawatts in the period. Suzlon
expects to sell more this year than last, the executive said,
without giving guidance. The company already sold about 88
percent of last year’s total volumes, equal to 219 megawatts, in
this quarter, according to Vagadia.

Suzlon failed to repay $209 million in October in India’s
biggest convertible-bond default. That triggered a cross default
on another $121 million of convertible notes maturing in July
2014 and $190 million in April 2016.

Bondholders have not yet exercised their right to demand
early repayment under the cross-default clause, Vagadia said
today. Discussions with bondholders are moving in the “right
direction” and Suzlon expects to reach an agreement with them
in this quarter, he said.